Viral Rajendra Patel Vs PCIT (ITAT Ahmedabad)
Section 54F Exemption allowed even if land is purchased (for construction of a new residential house) beyond 2 years from the date of sale of Asset
Summary: In the case of Viral Rajendra Patel vs. PCIT (ITAT Ahmedabad), the Tribunal dealt with an appeal against a revisionary order passed under Section 263 of the Income Tax Act, 1961. The Principal Commissioner of Income Tax (PCIT) had deemed the original assessment order for Assessment Year 2018-19 erroneous and prejudicial to the interests of the Revenue. The contention centered around the exemption claim of ₹6.82 crore under Section 54F, which was allowed by the Assessing Officer (AO). The PCIT argued that the purchase of land, forming the basis of the exemption, fell outside the prescribed time limit of two years, thus rendering the exemption invalid.
The assessee, however, countered this interpretation, asserting that the land was purchased with the intention of constructing a house, for which Section 54F allows a three-year timeline. The Tribunal reviewed the provisions and agreed with the assessee, noting that the PCIT had misinterpreted the law by applying the two-year limit for property purchases instead of the three-year period for construction. The Tribunal concluded that the AO’s decision to grant the exemption was lawful and not erroneous, and therefore, the revisionary jurisdiction exercised by the PCIT was unwarranted.
